The government is optimistic that the contribution of renewables in the national energy mix will reach 25 per cent by 2025 and 35 per cent by 2050, Energy and Mineral Resources Minister Jero Wacik said on Tuesday.
Wacik said that renewable energy currently accounts for only 5 to 6 per cent of the national energy mix.
He said that the government was seeking to raise public awareness of the need to shed dependence on fossil-based energy, and that investors should be encouraged to invest in the generation of electricity from renewable sources. “We will provide more incentives for investors willing to generate electricity based on new or renewable energy,” Jero said.
He said that the incentives could range from tax holidays during the exploration period to higher selling prices to the state utility Perusahaan Listrik Negara.
“With that, we are certain that our target of 35 per cent in the national energy mix can be reached by 2050,” he said.
He added that the stocks of fossil fuels were depleting fast and therefore alternatives needed to be found and developed.
Jero said that Indonesia had access to several sources of renewable energy. The country holds 40 per cent of the world’s geothermal reserves, has unlimited solar energy potential, and has the potential for biomass development using a variety of raw materials.
Indonesian Renewable Energy Society (METI) chairman Rachmat Gobel said Indonesia would need at least $100 billion invested in order to harness the potential alternative energy sources.
“[Such funding needs] can grow even higher because development of renewable energy carries great risks,” he said.
Rachmat, a prominent businessman, said the private sector was now eyeing renewable energy as a potential investment after the government showed its commitment to the industry through tax holidays and other incentives.
Jero said that PLN will increase the purchase price of electricity produced from geothermal sources from 9.7 cents per kilowatt hour to between 10 and 17 cents per kilowatt hour. The rate hike will financially benefit geothermal energy companies and bring fresh investment to the sector, the minister said.
The payment rate is still lower than the 35 cents to 40 cents per kilowatt hour PLN has earmarked for electricity produced through fossil fuels.
“It is a win-win solution,” Jero said. “The government will also save money by reducing the subsidy for the public.”
The government has so far earmarked Rp 200 trillion ($21 billion) in subsidies for fuel and another Rp 100 trillion for electricity, Jero said. The minister said the size of the savings to the subsidy budget through renewables growth was unclear.
Meanwhile, the government on Tuesday signed a memorandum of understanding with Basel Investindo and Shanghai Aerospace Automobile Electromechanical to build a 200-megawatt solar energy power plant.
“This is a perfect solution for Indonesia particularly areas untouched by the power grid,” said Basel president director Edwin Hernawan Soekowati.
